Centre revokes mandatory coal import target after many flip-flops

NTPC and Coal India had awarded import contracts to Adani

In just three months of the Centre directing power generators (gencos) to “mandatorily” blend imported coal with the domestic variety, it has revoked the order, leaving it to them to ship in the commodity from abroad if need be.
 
This comes in the wake of a pushback from several states that said they will not pay higher tariffs on account of imported coal.
 
Uttar Pradesh and Maharashtra were leading this pack, Business Standard had reported.
 
Sector executives said blended coal led to power price increases of 50-70 paise per unit, which were borne by the customers. Among the generating units, NTPC has imported the highest amount -- 6.25 million tonnes (MT) -- to date and is in the process of importing 15 MT more. The union power ministry in a separate order directed NTPC as well to bring down imported coal blending to 5 per cent from earlier mandated 10 per cent. NTPC currently has 80 per cent of their normative coal stock available at its plant end.
 
At Rs 10,000 a tonne, imported coal is five times costlier than domestic coal.
 
The Union power ministry in an order on Tuesday said it had reviewed the coal stock position, which varied across state-owned power-generating companies (gencos).
 
“Many states have more than 50 per cent of normative levels whereas many other states still have stocks near critical levels. In view of the above facts, it has been decided that now onwards, states/IPPs (independent power producers) and ministry of coal may decide the blending percentage after assessing the availability of domestic coal supplies,” said the order.
 
The average coal stocks across power gencos in the country stand at 55 per cent of their demand or 10 days of the coal stock. This has increased slightly over the past months, when it ranged between six and nine days.
 
Meanwhile, responding to questions regarding coal import in Parliament, Union Power Minister R K Singh said India would have faced “substantial load shedding (power cuts) if the country had not decided to blend imported coal”.
 
“Coal production has increased but not at a pace that it can meet our growing demand. Today, our domestic coal stock is around 23 million tonnes (MT). If we had not blended it, it would have been 7.8 MT, which is the minimum level,” the minister said.
 
“There was a shortfall of 120,000 tonnes between the average daily demand and supply of coal,” he said.
 
The power ministry on May 5 had issued a directive under Section 11 of the Electricity Act, asking gencos to import coal for blending up to 10 per cent at their generating units.
 
On May 18, it told gencos the coal-blending benchmark would be increased to 15 per cent if they did not import coal by the end of the month. However, two weeks later, the ministry asked them to put their tenders in abeyance. Instead, it asked Coal India Ltd (CIL) to import coal for state and private gencos.
 
State and private gencos were estimated to cumulatively require 38-40 million tonnes of imported coal for blending at 10 per cent.
 
However, the demand with CIL was 2.4 MT. The tender for importing coal worth Rs 4,500 crore went to Adani Enterprises. Till now, state gencos have imported barely 600,000 tonnes.
 
Similarly, NTPC awarded tenders of 6.25 MT of imported coal, worth Rs 8,300 crore, to Adani Enterprises. According to a Lok Sabha reply, power gencos imported 9.2 million tonnes this fiscal year.
 
Senior coal ministry officials said there was no need to import coal because CIL had stepped up production and had asked gencos to stock up.
 
“After the mismatch in October last year, CIL, since the beginning of this year, has been pursuing gencos to stock coal in advance,” said an official, adding that till July, the company’s production increased by 24 per cent over the same period last year.